From left, Stewart, Lyn, Marks and Benjamin
Hopeton Morrison, Contributor
MANY, PERHAPS most, persons have dreamed of owning a business of their own to anchor their dream of lifelong financial security. After all, few things are more attractive than the thought of running a successful business of your own.
For some it is not even the fact that you become your own boss, it is more than that. Some of our leading entrepreneurs such as Butch Stewart, Audrey Marks, Kenny Benjamin and Thalia Lyn can attest to the fact that it was more than the thought of money that drove them to begin their own enterprises.
There are myriad reasons why people dream of starting up or purchasing a successful business of their own. There is the dream of having far more time with loved ones, especially those who have growing children. For many persons, male and female alike, the one thing they wished they had far more of is time to spend with young children. Time to help with homework, time to attend the PTA meetings, or to see a young child recite her only line in a Christmas play. For others, it is time to spend time with ageing parents.
EMPLOYMENT STRESS
Then there is the stress of employment. All over the world the corporate environment can be a minefield of suspicion and politics. Most persons want to succeed for all the right reasons, but some have mastered the 'M&M' the art of massaging the boss and maligning peers.
There is the prestige of becoming a top manager in a successful organisation. And there is that most vital of all needs, which is earning enough from the job to ensure that the basic needs of food, clothing and shelter are met.
Few achieve this, but most strive for growth and upward mobility on the job to achieve Abraham Maslow's five-stage hierarchy of physiological needs all the way up to the fifth level of 'Self-actualisation'.
Perhaps more than any other reason, is the desire many of us have to be away from the rigours of being constantly accountable to a boss in an organisation and being masters of our own fate.
So then, if entrepreneurship is such an attractive means of lifelong psychological and financial independence, why are so many Jamaicans reluctant to go this route?
Over the years we have found out a number of credible reasons, including the following.
The very first issue is the question of crime and violence.
The awful scourge of extortion has spread its ugly wings far and wide. You sow years of sweat, tears, and even blood sometimes, to build a business to assure your own financial security and along comes the repulsive spectre of the extortionist or gunman to harvest what he did not sow.
SENT PACKING
It is to our certain knowledge that crime has sent many successful business persons packing up and closing down for fear of their lives and the safety of their families. But there is no question that there are viable business opportunities all around Jamaica today.
Many persons engage in retailing as a first stop in their entrepreneurship journey. Grocery retailing/supermarkets, green groceries, restaurants, bars, hardware and haberdasheries, furniture retailing, pharmacies, variety shops, car parts and stationery outlets have all formed a base for many to establish a long and lasting business of their own. But many have closed shop, sometimes after less than one year, because of the real and present threat, or actual occurrence of injury or death from gunmen and extortionists.
For those brave ones who have attempted to stand up to the criminals, this is often at considerable cost for security. The cost of maintaining armed and unarmed security guards and/or electronic security systems has been very high indeed.
FINANCING
The second issue is financing. That by itself, however, is hardly ever the issue in Jamaica. Invariably, the major issue for the entrepreneur is access to or securing the finances. In spite of all the noise you hear from time to time about rates being too high for starting up and maintaining a small business in Jamaica, we know as an absolute fact that the cost of financing is always secondary to the access of funds.
When an entrepreneur needs funds for cash flow support, for example, or to purchase a particular capital equipment, what that entrepreneur wants at that point in time are the funds. Of course, the cost of the funds will always be a factor, but access to the funds is almost always more important to the entrepreneur at that point in time.
The good news is that access is now available from several sources. There are the specialised small business lending organisations, including the National Development Foundation of Jamaica and the Self-Start Fund. There is also a host of organisations that lend for micro enterprises (as against small businesses, which usually have needs up to $5 million). These micro agencies lend from $5,000 per person usually up to about $120,000 at varying rates from concessionary to development financing rates. Rates of 60 per cent and above are not uncommon for development financing, and are by no means usurious or unreasonable, especially when extending uncollateralised credit.
Institutions engaged in micro enterprise lending include the Micro Investment Development Agency (MIDA) and the inner-city located Micro Enterprise Financing Ltd., which utilises the non collateralised group lending methodology made famous by the Bangladesh Grameen Bank.
This methodology has been utilised to varying degrees of success in the past under a Netherlands/Government of Jamaica project that involved a number of credit unions, and the NDFJ.
It is understood that the Herro Blair-led 'Deliverance Centre' had established a lending programme through the City of Kingston Co-operative Credit Union Ltd. Again, access is always the crucial variable to programmes like these, as persons of limited means often cannot access funds from the traditional sources such as commercial banks. There are other non-traditional lenders such as COPE Foundation Ltd., which lends anywhere between $60,000 and $300,000; private sector-led initiatives such as JN Micro Lending Agency, which also utilises the group-lending approach; and ACCESS Financing Ltd.,which was founded and led by a dynamic young man, Marcus James.
The truth is that financing is available these days for almost anyone who has a viable business idea and is serious about starting out on their own.
Which brings me to a third issue in this business of utilising entrepreneurship as a means of achieving lifelong financial independence.
Is there an easier way of achieving your financial goals outside of the hassle of registering a business, getting a business enterprise number (BENO), registering and deducting GCT and making your monthly returns, and the whole issue of income tax calculations and so on? Is all of this worth the effort?
EFFORT
There was a time when would-be entrepreneurs simply stated that it was not worth the effort. It was, they said, much easier to simply invest funds in the safety of the money market, in 100 per cent 'safe' Government paper at highly attractive interest rates in the mid-30 per cent range and above, and this would form their first line of investment.
A second line was to buy hard currency and wait for the annual substantial depreciation of the Jamaican dollar at the end of the year. One would then convert at that time making a cool return on the investment.
Both arguments indeed have carried some authenticity over much of the last decade. We believe, however, that the times are changing. With six-month Treasury Bill rates now down to 14.98 per cent at June this year, we would argue that based on the strength of the NIR (US$1.6 billion at June) and a fact not often mentioned by financial analysts, the US$1.7 billion in hard currency accounts in Jamaica, the Bank of Jamaica seems to possess enough of a 'war chest' to defend the dollar and keep interest rates down.
So then, is it worth your while starting a business in Jamaica to achieve your goal of lifelong financial independence?
It most definitely is if you are faced with any or all of the following five situations:
First, you have been made redundant or currently faced with the real risk of becoming redundant, with little chance of picking up another job.
Second, your present employment situation is making you sick. You hate the job, you resent the people you work for, and you have developed hypertension, diabetes or some other stress-related illness because of it.
Third, you have worked all of your life, and as far as you can see, you are nowhere even remotely prepared for 20 to 30 years of retirement.
Fourth, you have not invested sufficiently and recognise that you and your family are seriously exposed.
Fifth, you have always known that you were an entrepreneur, but were just afraid to start before now.
Hopeton Morrison is the general manager of St. Thomas Co-operative Credit Union Ltd. and a lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com
